UPDATE 2-Nikon cuts forecasts as yen bites into profit

* Cuts full-year profit forecast to Y48 bln from Y52 bln

* Q2 profit Y3.9 bln vs consensus Y7.3 bln

* Trims chip stepper sales forecast to 53 units from 54

* Stepper product mix less profitable than expected

* Nudges up unit sales forecasts for compact cameras, lenses

* Revises full-year assumed dollar rate to 84 yen
(Adds comment, details)

By Isabel Reynolds

TOKYO, Nov 4 (BestGrowthStock) – Japanese camera and precision
equipment maker Nikon Corp (7731.T: ) cut its full-year profit
guidance on Thursday, as a stronger yen cancelled out the benefit
of growing camera sales.

Nikon, which competes with market leader Canon Inc (7751.T: )
and Sony Corp (6758.T: ) in digital cameras, fell short of
investors’ profit expectations for the July-September quarter,
despite healthy demand for its cameras and lenses, especially in

“If it were not for the effect of exchange rates, we would
have achieved a double-digit increase in sales and operating
profit for the half year,” Executive Vice President Ichiro Terato
told a news conference, referring to the camera division.

Instead, half-year operating profit at the camera division
fell by nearly 16 percent to 22.3 billion yen, while the
precision equipment business made a loss.

Despite having shifted most of its camera production
overseas, Nikon is being hit hard by a rise in the yen (JPY=: ),
which is hovering around 15-year highs close around 81 yen to the
dollar, eating into the value of the profits it brings home.

Last week, rival Canon beat market expectations for quarterly
profit and raised its annual profit outlook after cutting costs.

Nikon posted an operating profit of 3.9 billion yen for the
July-September quarter, far below an average estimate of 7.3
billion yen from four analysts, but above the company’s own
forecast of 2.2 billion yen.

The company also cut its operating profit forecast for the
full year to March 2011 to 48 billion yen from 52 billion yen,
below an average estimate of 57.8 billion yen in a survey of 22
analysts by Thomson Reuters I/B/E/S.

Nikon revised its assumption of the dollar’s exchange rate
for the full business year to 84 yen from 91 yen.

In precision equipment, Nikon trimmed its annual sales
forecast for steppers, machines that print electronic circuits
onto silicon wafers to make computer chips, to 53 units from 54
and said a less-profitable than expected product mix would cut
the division’s full-year profit by a third.

Rival chip-equipment maker ASML (ASML.AS: ) of the Netherlands,
the industry leader, beat forecasts with a big rise in
third-quarter profit (Read more your timing to make a profit.)s last month and said it should end the year
with a record order book. [ID:nLDE69B179]

Shares in Nikon have fallen about 24 percent to 1,552 yen
since the beginning of the financial year in April.
(Editing by Edwina Gibbs and Michael Watson)

UPDATE 2-Nikon cuts forecasts as yen bites into profit